Gold clings to gains above $1320 level

   •  A follow-through USD retracement helps regain traction.
   •  Slow Fed rate hike prospects provide an additional boost. 

Gold kicked off the week on a positive note and jumped back above $1320 level, recovering Friday’s entire retracement slide from over 2-week tops. 

The US Dollar continued with its retracement slide and corrected farther from yearly tops, which was seen eventually seen underpinning demand for dollar-denominated commodities - like gold. 

Investors also considered the prospects of slower Fed rate hike moves and a follow-through weakness in the US Treasury bond yields provided an additional boost to the non-yielding yellow metal.

However, Cleveland Fed President Loretta Mester's hawkish comments kept a lid on any further up-move, with global risk-on mood also doing little to support the precious metal's safe-haven appeal.

Hence, it would be prudent to wait for a strong follow-through buying before positioning for any further near-term appreciating move. A convincing breakthrough 100-day SMA barrier would negate any near-term bearish bias and pave the way for an extension of the commodity's near-term upward trajectory.

Technical levels to watch

The $1326-27 region (100-DMA) might continue to act as an immediate resistance, above which the metal is likely to aim towards challenging the $1331-33 supply zone. On the flip side, $1318 level now seems to have emerged as an immediate support, which if broken might accelerate the slide towards $1313 horizontal support en-route $1310 area.